Loans For Veterinarians to Open a Practice: Complete Guide

There are a wide variety of loans available to veterinarians whether you’re looking to start your own business, purchase a pre-existing business, or manage your student debt from veterinary school. No matter what loan makes the most sense to you, it can be helpful to survey the scope of what’s out there depending on your career goals.

Loans for Veterinarians: Funding Your Future

Loans for veterinarians are often highly specific about the way they can be used, which is prohibitive for many business ventures. (1) Still, these loans can be useful to the individual, such as student debt consolidation loans and veterinary practice loans.  

“Factors like your qualification requirements, loan purpose and desired loan terms can all influence the type of business loan that’s best for you.”

– Forbes.com

The future of your business depends on the cash that you can inject into it right now. How much further would your business go with an additional $200,000 this year? You could hire a couple of new employees or finance new exam equipment.

The wide variety of loans available can make it difficult to navigate between lenders, loans, financing, and many other terms that can sound like a foreign language to those just getting started in business. Still, these are essential items for any business owner to consider in securing the future of the business, even if it means hiring a professional to help guide the process.

Different Types of Financing Options and Loans for Veterinarians

Starting and operating a small business has never been easier than it is today with the wide range of options available. This multitude of loan options are available to veterinarians who are looking to start their own clinic or are expanding their current business into a multi-practice venture.

The most popular loan types range from new construction to equipment financing, all with a range of APRs and eligibility requirements.

With a strong business plan in place, many lenders will extend funding for the purchase of a new veterinary practice, even if you don’t have any prior history owning a business or working with that lender.

Finance Construction

A construction loan for a veterinary practice can help finance the construction of new buildings and structures, whether it’s an expansion of a pre-existing building or additional space for offices, exams, or boarding room. If the business requires additional construction of new space, or renovation of pre-existing space, it’s relatively easy to get a loan for the work so long as you have an established relationship with a lender already.

Often, a construction estimate is required before a lender will approve a loan amount, as the contractor’s estimate is used as a guarantee that the work will be performed under a certain amount, which prevents lenders from providing less than the necessary amount and leaving the business owner without recourse.

Note that construction estimates are valid for a certain timeframe, so it is important to ensure your loan funding will be received by the end of the valid period for the estimate.

Fund Product Expenses

Whether you are looking to replenish the medication for the back room or need a little financial help getting your waiting room stocked with all the latest pet toys, treats, and food.

These products can be utilized in your everyday business, or they can be inventory to carry for clientele looking to purchase on their routine visit to the clinic.

Product expenses are an unfortunately large part of many small business’ expenses, operating under the line item “cost of goods sold.” Lenders recognize this and are often willing to extend loans to help fund product expenses so that the business can expand its offering to clients and diversify into multiple streams of revenue.

If the business has an established relationship with the lender, it’s unlikely that the approval process will be painful in any way, though the process will differ based on the loan program and the amount of capital necessary to cover the expenses.

Get Working Capital

Working capital can help your business get out from underneath debts and continue operating as normal without necessitating an employment shift for your staff.

Lenders are more likely to extend working capital loans to businesses that are already established and can show that they have a history of generating revenue. While this isn’t necessary, it can help your odds of approval greatly. Businesses without any kind of operating history or history with the lender may have a difficult time getting working capital.

In many cases, a legitimate need for the capital must be provided, such as less cash flow than the total operating expenses, or a recent debt or serious expense that has removed your business’ ability to pay for its overhead temporarily.  

Purchase Equipment

Equipment is the most expensive part of running a veterinary clinic. Most small domestic animal practices have a waiting room, a surgical room, and an exam room. All these rooms must be outfitted with the appropriate scales, tables, tools, and safety measures to ensure that the veterinarians can treat their patients effectively and safely.

In an established business, most of the medical equipment is stocked over time or upgraded from previous equipment models, spreading the cost out over several years of operation. Startup clinics, however, must start small and rely on loans and other creative methods to acquire all the necessary equipment from the beginning. Often, the lender will ask questions related to the equipment, such as whether the equipment is necessary for the operation of the business, and how much profit you expect new equipment to bring into the business.

Add a New Location

Expanding your clinic into a multi-location practice is an exciting new milestone for any business. With an appropriate business plan for the expansion, lenders are often willing to extend loans to cover the expense of constructing a new location or purchasing pre-existing property.

The current business’ health will be considered with this type of loan, however, so the more profit you are able to show, the happier the lender will be as it lessens their risk.

Often, business owners will borrow against their pre-existing practice, using their first location as collateral if they are driving a sustainable profit and are confident in their repayment timeline. Others veterinary clinic owners may prefer to use other sources of collateral.

We Understand Your Business: Veterinary Small Business Loans

It’s your small business, and that’s a big deal. You shouldn’t have to settle for exploring loan options and vetting lenders all on your own. Almost every loan program has its pros and cons, and it can be difficult to understand the differences between lenders. (2)

At BSF, our team understands veterinary practices inside and out, giving you peace of mind in specialized connections and industry-specific advice. There are many small business loans available, but they might not be the right choice for your clinic with the type of services it provides. 

“Having more sources of available funding is a boon for businesses, but it also requires becoming educated about the pluses and minuses of each, and exactly what you’re signing on for when you apply.”

– Huffpost.com

As veterinary clinic brokers, our team is experienced in helping you find the right resources for your business. We’ll guide you through selling your clinic, buying a pre-existing veterinary business, or financing a practice, and much more. Give us a call today and we’ll discuss how to take the next steps for your business.

How Do You Finance a Veterinary Practice?

Before you can finance the purchase of a veterinary practice, whether you’re outfitting one from scratch or purchasing a pre-existing, fully-operational business, the lender needs to be able to weigh the risk of investing in you and your business.

This means that you will need to showcase a strong business plan, as well as strong credit trustworthiness, either for your business’ reputation or for you own.

The lower risk the investment is to the lender, the more likely you are to receive approval for the loan and be able to negotiate a lower interest rate on the overall balance.

Fortunately, financing a veterinary practice is easy when you have the right connections. Call or email BSF today to learn more about our veterinary practice broker team and how we can help you take the next steps with your business.

How Much Do Private-Practice Veterinarians Make?

Ultimately, the amount that any professional makes is dependent on their location, as most salaries are based on cost of living. For the veterinarian working in a higher-cost state or in a higher-cost city, they are more likely to earn a higher salary than the veterinarian in a lower-cost city and state.

Most veterinarians who work for someone else make an average of $95,000 every year, equating to roughly $40 an hour for their skilled labor. Still, this is not often enough for most people to justify the debt accrued throughout veterinary school, so it can be tempting to explore other options.

Veterinarians who own the practice, however, are in control of the business and can set their own salary so long as the business continues to operate as intended. This is a unique advantage that many veterinarians are eager to learn more about when they are fresh out of school, while others are considering the change to increase their pay from what they are currently paid working for someone else.

According to some analysis of the top earners, private practice veterinarians can make upwards of $159,000 per year. Unfortunately, however, owning your own business isn’t always glamorous, and this annual salary comes after earning a much lower rate – closer to $53,000 – in the first few years of a startup business’ life cycle. Once the business is established and has a sustained source of revenue, however, that number can rise.

This knowledge has greatly increased the popularity of purchasing pre-existing veterinary practices over building a business from scratch.

The Fundamentals of Borrowing

With new private lenders offering loans online with less stringent eligibility requirements, it’s no wonder that veterinary clinics are borrowing more money than ever. (2) When it comes to business, however, there are several fundamentals of borrowing that first-time business owners are unaware of and it can lead to some unsightly pitfalls in the business’ profit loss sheets.

“The ability to apply and be approved for a loan over the Internet is game changing in the financial services industry. Individuals and businesses that had difficulty being approved by traditional lenders in the past now have options from a vast array of potential funders for loans.”

– Huffpost.com

First, it’s essential to have a good record of credit history for your business. If your business doesn’t have a credit history yet, your personal credit score will be utilized, often along with personal assets, though some lenders allow you to utilize assets from the business even if you are borrowing under your personal credit.

Then, it’s important to understand what lenders are looking for before you apply to a loan program. Most lenders are looking for a balance between their risk and profitability. Loans generate revenue for the lender, and the interest rate and any collateral are all ways of further deferring risk. They do, however, have to assess your account for a baseline level of risk, which may require a review of your credit history, business plan, intent of use, and assets.

Lastly, ensure you have a repayment program set up with the lender as soon as you are approved for the loan to avoid getting your business into debt with the lender. One missed payment can accrue a lot of interest.

Evaluating Lenders

It’s important to ensure that your lender offers exceptional customer service and are willing to work with you in negotiating different terms and discussing loan programs that work for you.

If you are seeking the assistance of a private loan firm, it is also important to review their client testimonials and online ratings through the Better Business Bureau and other third-party review sites.

If possible, look for additional endorsements that provide the lender with a legitimate backing as well. Due diligence is a critical part of finding and evaluating your lender, even before you begin looking at loan programs they offer.

Tired of looking for a lender you can trust with a loan program your business is eligible for? Talk to the brokers at BSF today to learn more about loan recommendations for buying, selling, or financing your veterinary clinic.

How Do I Start My Own Veterinary Practice?

Starting your own veterinary practice is a simple process depending on the business model you intend to use. Many veterinarians prefer to purchase a pre-existing business so they can begin helping more patients sooner, rather than focusing on the struggles of the average startup.

To purchase a pre-existing business, it helps to have a veterinary practice broker available to help you find and negotiate deals for veterinary clinics in your desired locations, as well as select the right loans for your needs.

Starting a veterinary practice on your own can be much more difficult in the first few years, but it can be a much more rewarding process as well as you get to see how it grows throughout the years. A startup is not for everyone, as the process is much riskier than purchasing a pre-existing business.

If you are interested in starting a new business from the ground up, however, a veterinary broker can help you find the right location and loans for your needs. Give the BSF team a call today to start a conversation about where you need guidance in taking the next step with your business.

References:

    1. Forbes.com, 13 Types of Business Loans: Find the Best Loan
      https://www.forbes.com/advisor/business-loans/types-of-business-loans/
    1. Huffpost.com, Small Business Loans: Options Along the Alternative Financing Spectrum
      https://www.huffpost.com/entry/small-business-loans-opti_b_7739532